January 2014

The total tax contribution of the UK’s biggest companies rose by £500 million ($820 million) on 2012, despite corporation tax revenues falling sharply. And, for the first time, employers’ national insurance contributions overtook corporation tax as the biggest source of tax revenue from the 100 Group of Britain’s biggest companies.

Tax executives are feeling the heat as governments around the world increase enforcement, initiating more audits and disputes. Some, though by no means a majority, believe a concept known in different jurisdictions as horizontal monitoring, enhanced relationships or cooperative compliance may be the key to an improved relationship between both sides.

After pledging to reinstate the 50p top rate of income tax if his Labour party returns to power at the next election, Ed Balls, shadow chancellor, has been attacked for promoting an “anti-business agenda”.

The work to align US and international accounting standards on revenue recognition could be the first project to benefit from a Financial Accounting Foundation (FAF) announcement that it will contribute up to $3 million to the International Financial Reporting Standards Foundation to support the completion of international convergence projects.

As non-EU based businesses broaden their markets and their offerings, businesses are increasingly finding that the indirect tax consequences of selling into the EU, the US and Australia create potential barriers to smooth international trading, explain Richard Woolich, Hugh Goodwin, and Matthew Cridland of DLA Piper.

Ensuring that their company’s interests are protected as tax policy takes shape is not an easy task, but is an essential one for any tax director. However, the choice of representative or industry organisation to align with to achieve that, is not always obvious, explains Ralph Cunningham.

As non-EU based businesses broaden their markets and their offerings, they are increasingly finding that the indirect tax consequences of selling into the EU, the US and Australia create potential barriers to smooth international trading, explain Richard Woolich, Hugh Goodwin, and Matthew Cridland of DLA Piper.

Patrick Connolly is an experienced senior in-house tax adviser who has spent the past 10 years in in-house regional tax roles covering Europe, the Middle East, Africa and the Asia/Pacific regions as well as head office tax responsibilities. He shares his views on getting the most value from the client/adviser relationship. Paul Dunne, national managing tax partner for KPMG New Zealand and the tax lead on a number of multinational clients, provides his response and comments.

Taxpayers are aware that demonstrating substance in a given transaction is of paramount importance. Here, Sanjay Sanghvi and Aditi Mukundan of Khaitan & Co explain why this is even more relevant in India by exploring the evolution of the substance requirement in Indian tax law.

Seth Terkper, Ghana’s minister of finance, and Hafiz Choudhury, senior adviser, International Tax and Investment Centre, discuss the challenges for developing countries in creating tax systems that raise enough revenue to fund development and also encourage investment.

Fewer private letter rulings given by the US tax authorities and a desire for liquidity are two of the reasons why insurance is becoming a popular protection against tax risks, explain James Gray and Alexios Hadji of Squire Sanders.

More than ever, tax authorities around the globe are required to work together to tackle cross-border tax avoidance and evasion issues. Satoru Araki explains how this could happen better in Asia-Pacific.

The National Treasury Attorney-General's Office in Brazil is claiming that Supreme Court decisions can kill the effect of decisions in favour of taxpayers, allowing the authorities to charge taxes that were previously ruled out by the courts. However, as Joao Marcos Colussi of Mattos Filho explains, other courts do not agree

Spain should have to pay the European Commission €50 million ($68 million) and the costs of the case for failing to implement a European Court of Justice (ECJ) decision against tax incentives in good time.

The Tax Court of Canada favoured the Canada Revenue Agency's arguments just before Christmas in a case concerning a receivable sales agreement between the McKesson Canada and its parent company in Luxembourg. But the loser is refusing to take ‘no’ for an answer.

Tony Abbott, Prime Minister of Australia, gave an address today at the 44th Annual Meeting of the World Economic Forum (WEF) in Davos, Switzerland, setting out Australia’s priorities for its G20 presidency.

Algirdas Semeta, European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud, has urged member states not to water down proposals for a financial transactions tax (FTT), arguing that present delays may be instead overcome by a phased implementation of the tax.

The US Department of Justice (DoJ) believes the defeat of a challenge to the validity of interest-reporting regulations has boosted the government’s efforts to clamp down on US taxpayers who do not declare income and assets held overseas.

Some of Europe's biggest taxpayers are concerned about the increased risk of double taxation from Poland’s proposed changes to its controlled foreign corporation (CFC) rules and thin capitalisation regime.

A report from BUSINESSEUROPE reinforces the business community’s claims that double taxation outside of the area of transfer pricing remains a significant problem. At the October meeting of the European Commission’s Platform for Tax Good Governance, EU member states had claimed the issue was no longer relevant.

Norbert Walter-Borjans, finance minister for North Rhine-Westphalia, has repeated his claim that Germany must act unilaterally to target multinational tax avoidance through BEPS (base erosion and profit shifting) if insufficient progress has been made through multilateral efforts by the time autumn arrives.

The Income Tax Appellate Tribunal (ITAT) has in a recent ruling confirmed the levy of penalty on the offset of tax-exempt capital losses against taxable income in a finding that the claim of the taxpayer was not sustainable in law. In doing so, the ITAT has highlighted some crucial aspects of law concerning levy of tax penalties, explain Sanjay Sanghvi & Ashish Mehta of Khaitan & Co.

Progress towards reforming the US tax code will be delayed even further now that Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, is moving to Beijing to take up his new role as US ambassador to China.

A change in the final version of a document critical to compliance with the Foreign Account Tax Compliance Act (FATCA) will allow financial firms to choose which form of due diligence procedures to follow.

The French tax authorities are likely to step up their scrutiny of so-called non-cooperative states and territories (NCST) in the future. International groups and private-equity funds should examine their structures to see if any measures related to this year’s list of such jurisdictions will affect them.

Italy’s parliament has passed the Google tax which will require companies to buy internet advertisements from locally-registered companies and not from companies based in tax havens including Bermuda and Ireland. But the proposal may violate EU laws on non-discrimination regarding commercial activity.

The Portuguese corporate income tax (CIT) reform - approved in the last days of December - has the following four cornerstones: simplification, competitiveness, decrease of CIT rate and review of existing tax incentives or preferences. The new rules will be applicable to tax periods starting, or taxable events occurring, on or after January 1 2014.

The Mexican Federal Tax Code (FTC) in force was published on December 31 1981, and established for the first time a 45 day deadline to file an administrative appeal, unlike the FTC published on January 19 1967 that stated a 15 day deadline.

It is clear that the role of multinational enterprises (MNEs) in the world has been constantly increasing since the OECD first addressed its concerns about intercompany transactions in its model tax convention.

Two forthcoming issues of International Tax Review will include surveys of the leading tax transactional (March) and tax planning firms (May) around the world. The firms will be ranked after polls of corporate taxpayers. This is your opportunity to vote.